TOKYO—Japanese industrial output fell unexpectedly for the second straight month in August, raising the possibility that the world’s third-largest economy will fall into a recession for the second time in as many years and adding to fears about global growth.

The disappointing result strengthens the view held by some economists that Prime Minister
Shinzo Abe’s
administration and the
Bank of Japan
will take action to prop up a sputtering economy that is showing few signs of the kind of growth promised by Mr. Abe’s ambitious economic revitalization program.

Output of goods, ranging from boilers and excavators to cars and cosmetics, fell 0.5% in August from the previous month, following a decline of 0.8% in July, according to government data released Wednesday.

The figure sharply undershot a consensus forecast for a 1.0% increase, prompting the ministry to downgrade its assessment of output to “trending on a weak note” from “trending with ups and downs.”

Industrial output is seen providing a good approximation of overall economic activity, and economists now predict the nation’s economy as a whole also contracted for the second straight quarter in July-September.

“Japan’s recovery has ground to a halt,” said Marcel Thieliant, economist at Capital Economics. The latest output data suggests “Japan’s economy shrank yet again in the quarter that ends today. Additional easing by the Bank of Japan next month looks all but inevitable,” he added.

Japan’s GDP shrank at an annualized pace of 1.2% in the second quarter.

Toshihiro Nagahama,
chief economist at Dai-Ichi Life Research Institute, said the data have effectively set in stone the formulation of an economic stimulus package by the government. Mr. Nagahama said he expects a small contraction in the third quarter, but isn't sure whether the central bank will embark on additional monetary easing.

The output drop is likely to come as a blow for the BOJ. Officials at the central bank were telling visitors on Tuesday that they strongly hoped industrial output would rebound in August, saying it would be crucial factor in measuring the health of the economy along with Thursday’s tankan survey of business sentiment, people close to the central bank told The Wall Street Journal.

The bank meets next week to decide on policy and also at the end of October, when many economists believe it will take extra action.

The slowdown in China that has generated so much concern for the outlook of the global economy also loomed large behind August’s surprise output weakness in Japan. August also saw deadly explosions in the Chinese port city of Tianjin that contributed to a drop in Japanese exports to the country.

Sales of Japanese cars in China have been resilient so far, but exports of auto components have slumped.

Also weighing on output were weak shipments of electronic components. The release of Apple’s iPhone 6s in the autumn had been expected to buoy demand for Japanese components and production machinery, but Wednesday’s data contradicted such predictions.

“Apparently, fewer Japanese components are used in the latest models than previous ones,” a ministry official said.